Model: Dividends paid out of pre-acquisition profits and goodwill of subsidiary company. From the following balance sheets of a holding company and its subsidiary on 31 March 2011, prepare a consolidated balance sheet.
|
Liabilities |
H Ltd. |
S Ltd. |
Assets |
H Ltd. |
S Ltd. |
|
Share Capital |
15,00,000 |
6,00,000 |
Goodwill |
90,000 |
30,000 |
|
(Shares of Rs.10 Each) |
Machinery |
9,00,000 |
4,50,000 |
||
|
General Reserve |
2,40,000 |
1,80,000 |
Stock |
2,40,000 |
1,50,000 |
|
P&L Account |
2,70,000 |
2,10,000 |
Debtors |
3,60,000 |
4,80,000 |
|
Sundry Creditors |
1,50,000 |
120,000 |
Cash and Bank |
60,000 |
30,000 |
|
Outstanding Expenses |
60,000 |
30,000 |
Investments: |
||
|
48,000 Shares in S Ltd. — |
5,70,000 |
||||
|
11,40,000 |
22,20,000 |
11,40,000 |
When control was acquired, S Ltd. had Rs.1,20,000 in general reserve and Rs.90,000 in profit and loss account. Immediately on purchase of shares, H Ltd. received Rs.48,000 as dividend from S Ltd., which was credited to profit and loss account. Debtors of H Ltd. include Rs.60,000 due from S Ltd. whereas creditors of S Ltd. include Rs.45,000 due to H Ltd.; the difference being accounted for by a cheque-in-transfer.